Don’t put all your eggs

in one basket!

Bedfordshire’s
Sustainable Funding Guide
The National Council for Voluntary Organisations’ (NCVO) Sustainable Funding Project has
been set up to promote an approach that encourages voluntary and community organisations across
the UK to explore opportunities to diversify their income streams, so that they are not solely reliant on
one income stream, be it from donors, funders, purchasers or consumers. Truly a case of ‘not
putting all your eggs in one basket’!

The aim of this guide is to give a Bedfordshire perspective to the spectrum of income streams
available to voluntary and community groups locally, as well as nationally. Community and Voluntary
Service is committed to promoting a sustainable funding approach.

To find out more about NCVO’s Sustainable Funding Project’s aim of effecting long-term change in
the way that voluntary and community organisations are funded, visit www.ncvo-vol.org.uk/advice-
support/funding-finance/sustainable-funding/sustainable-funding-approach. Then turn the
pages of this guide and discover how your group could benefit from trying such an approach.
 What does 'Sustainable
Funding' mean?
A Sustainable Funding Approach encourages organisations to explore income
opportunities across a spectrum of opportunities; from charitable donations at one
end of this range, through grants, service level agreements and contracts, to social
enterprise activity, trading goods and services. This can spread risk and ensure
organisations are best placed to take advantage of emerging trends and opportunities
and are more able to safeguard their financial future without sacrificing independence
or mission.
This approach to sustainable funding for any organisation must be underpinned by thorough planning,
an assessment of the impact of diversifying your funding streams, full cost analysis (detailed later in this
guide) and understanding of when loan finance can supplement income.

Every organisation is unique, and so diversifying your funding streams is dependent on your particular
group’s circumstances. The resources identified in this guide, together with practical help from the team
at Community and Voluntary Service can lead to a well-balanced approach for your organisation with
an ultimate goal of securing your group’s future.

How does my group achieve Sustainability?

Sustainability begins not with funding, but with planning - before organisations start thinking about
funding, they need to decide exactly what their mission, aims and goals are, and plan how to achieve
these. Only when organisations know what they want to achieve, and have planned accordingly, are
they in a position to assess which income streams are appropriate for them and begin to pursue them.
To assist in this planning approach, NCVO has produced ‘Tools for tomorrow - A practical guide to
strategic planning for voluntary organisations’ that can be downloaded from www.ncvo-vol.org.uk

Increasingly, charities and voluntary groups are being told to move away from grant dependency, and
to become more business-like, earn income and consider loan finance. Additionally opportunities for
delivering public services are increasing. Organisations need to react accordingly to survive and
prosper in this new environment. Thus to achieve sustainability in the current economic climate, an
organisation’s funding needs to be:
Stable - it is extremely important to have a mixture of income streams, so that if one diminishes,
it does not threaten your organisation’s viability overall. Furthermore an ability to predict with
confidence your future resource levels enables you to undertake longer-term planning which can
benefit your organisation.
Suitable - it is equally important that there is a good match between your organisation’s objectives
and the funding or financing that you are seeking. You should not be distracted from your
organisation’s core objectives in seeking funding.
Sufficient - there will always be competition for funding, so it is vital that you understand your
group’s costs properly, as this will allow you to make informed decisions about accepting contracts
and undertaking any project work. This is critical for effective planning.

Community and Voluntary Service has a number of information sheets available to download from
www.yourcvs.org that can assist you in planning for your group’s future, including:
Business Plan Tool Kit
How to Develop Budgets and Cashflow Forecasts
 Sustainable Funding:
Across the Income Spectrum
Income options available to voluntary and community organisations

Gift Economy Grant Funding Structured Market Open Market

Philanthropic giving Funding to deliver Payment for goods Trading goods and
Voluntary donations specified outcomes and services services
(from grant making trusts, according to the
the Lottery, local terms set out in a
authorities etc) contract (includes
tendering for contracts)

ASKING EARNING
For many voluntary and community organisations the key to
sustainable funding is diversifying their income across the
full spectrum of opportunities.
As you move across the spectrum from left to right - from
asking to earning - the level of expectation regarding what is
received in return for the income increases.
The key to sustainability for your organisation is knowing
which streams are the right ones for your organisation to
explore and how to develop the capacity to be able to secure
and manage them.

Do you need to diversify?

To find out, using the table below, review your current income streams and assess whether a
more diverse funding approach could benefit your organisation and your beneficiaries:
Income Stream Number of Funding Amount Level of Dependency
Funders Length £
Low < 10% Medium < 50% High > 50%
Donations
Grants
Contracts
Trading

If it is not possible to diversify your funding across the spectrum of Donations, Grants,
Contracts or Trading, then consider diversifying within a particular stream (i.e.
Donations - from Individuals/Private Sector, Grants - from Trusts and Foundations/Public
Sector Agencies/Private Sector, Contracts - with other Voluntary Organisations/Public Sector
Agencies/Private Sector, Trading - with Individuals/Other Voluntary Organisations/Public
Sector Agencies/Private Sector).

Analyse your Funding Mix online: www.financehub.org.uk/fundingmix.aspa

 Funding from
Donations
The Gift Economy provides unrestricted funding from donations and can allow you to carry out activities
that are not currently supported by grant programmes or contracts. There are now a huge number of
ways people can donate to your organisation. Here are a few ideas for you to consider:
Donations via Collecting Tins Legacy Fundraising
Payroll Giving Raffles and Lotteries

Benefits and Challenges of the Donations Funding Stream

Unrestricted income stream Can be many small or few large donations
Voluntary contribution or philanthropy Requires good reputation and communication
Relationship based on trust Requires marketing and fundraising skills
Requires transparency and clarity about use of income

Thinking About Accepting Donations? What to Consider?

Tax-Effective Giving - the Institute of Fundraising’s website (www.tax-effectivegiving.org.uk) provides a
wealth of information about Gift Aid, Payroll Giving, Legacy Giving and the Gift of Shares.
Gift Aid - this scheme allows charities to claim back from the Inland Revenue the tax that the donor has paid on
their donation. Find out about registering your charity at www.hmrc.gov.uk/charities/gift-aid.htm. However, if
you don’t qualify for Gift Aid because your organisation is not a registered charity or a sports club with CASC
status and is carrying out charitable work, then the Bedfordshire and Luton Community Foundation may be
able to help. Under their scheme qualifying gifts (generally of over £200) have to be made to the Foundation
and a Gift Aid declaration has to be signed by the donor in favour of the Foundation. They will then make a
grant to the selected organisation for the value of the cheque. Then once a year they claim the Gift Aid on all
donations received and pass on the relevant amount of Gift Aid to the organisation, less a small administration
fee. Contact the Foundation to find out how to set up an agreement to manage this process via 01767 626459
or by emailing mark.west@blcf.org.uk.
Creating an Online Fundraising Page - there are a number of sites your charity might consider, such as
Bmycharity (www.bmycharity.com), Justgiving (www.justgiving.com), My Charity Page
(www.mycharitypage.com), MyGift (www.mygift.org.uk) and Virgin Money Giving
(www.virginmoneygiving.com). You will find that the sites either charge an initial set-up fee or take a
percentage of the Gift Aid collected as an administration fee.
Legacy Fundraising - bequests, large or small, can make a big difference. Details concerning legacy
fundraising can be found on the Remember a Charity website (www.rememberacharity.org.uk). All
charitable bequests are deducted from the value of the estate before inheritance tax is calculated. For example
locally, a number of charities have come together and formed the Charities in Bedford Association (CIBA),
and their legacy pack can now be found in local solicitors’ offices.
Payroll Giving - employees sign up to donate to a selected charity directly from their pay-packet. The donation
is deducted at source by their employer and sent directly to their nominated charity, who receive the donation
plus tax as Gift Aid. You can find more about Payroll Giving at www.hmrc.gov.uk/businesses/giving/payroll-
giving.htm
Collections - you will need to contact your local authority well in advance to obtain a permit or licence to collect
(contact details below). Helpers should be equipped with sealed and labelled collecting tins plus ID badges. It is
good practice for two individuals to be present when the tins are opened. Information sheet: www.yourcvs.org.
Raffles/Lotteries - if you are selling raffle tickets to the general public, you will need to register with your local
authority under the Lotteries and Amusements Act 1976 before you start. Bedford Borough Council -
01234 267422 or Central Bedfordshire Council - 0300 300 8000. Information sheet: www.yourcvs.org.
 Funding from
Grants
Grants are an important form of funding that enable many voluntary and community organisations to
provide services that make a real difference to people’s lives. But finding and applying for grants
takes time, and many grants come with strings attached that require careful management. Grant
funding is changing too, with increasing levels of competition and some funders preferring to offer
contracts or loans. Increasingly voluntary and community organisations are combining grant funding
with other options such as trading, contracting and loan finance. Here are some suggestions of where
you might seek grant funding:

Grant Making Trusts The National Lottery

Statutory Authorities

Benefits and Challenges of the Grants Funding Stream

Restricted income stream
Subsidy of project or organisation
Requires transparency and clarity about use of
income
Relationship based on expectations of projects
Grant funding or output/outcome-linked income
Requires project planning and monitoring
A clear understanding of funder’s criteria
essential

Thinking About Applying for Grants? What to Consider?

Is your organisation ‘Fit for Funding’? - CVS offers a monthly workshop that covers all the basics to get
you to the stage where your organisation will be able to apply for funding. You will be taken through all the
documentation you will need to have in place (including governing documents and policies), together with a
guide to budgeting and an explanation of the basics of outcomes and demonstrating need. There is also an
opportunity to go through examples of funding applications and guidance on the use of our funding resources
area, including a demonstration of our funding databases. Most importantly this two-hour workshop is
FREE! Visit www.yourcvs.org for details of upcoming workshops or ring us on 01234 354366.

Can your group demonstrate need for Grant Funding? Does your group have an understanding of
Outcomes? - in this follow-up workshop, you can build on the skills you gained from the ‘Fit for Funding’
workshop and learn how to identify and explain need for your work. Additionally by the end of the workshop
you will be able to define your group’s aims, outcomes, targets and milestones. Using practical examples
and an interactive workshop, the aim is to make sense of some of the most common problems groups have
when making funding applications. Again this workshop is FREE! Visit www.yourcvs.org for details of
upcoming workshops or ring us on 01234 354366.

CVS Funding Resources Library - our Resources Library can be booked by any local voluntary or
community group free of charge. It is available on weekdays between 9am and 5pm and can be accessed
at other times by special arrangement. Using the Resources Library you can search for funders via our
subscription databases (FunderFinder and Trustfunding.org.uk) and then research the resulting funders
through the funding directories, books, guides and toolkits we hold in our library. You can book a session
today by calling us on 01234 354366.

CVS Website - visit our website at www.yourcvs.org for the latest local funding information and ensure
you download our Fundraising Toolkit (that includes comprehensive details of local funders).

Funding Central Website - visit NCVO’s free online database of grant funding opportunities at
www.fundingcentral.org.uk.
 Funding from
Contracts
Whilst opportunities to secure grants for your organisation are likely to be
decreasing - or, at best, remaining static - over recent years the voluntary “Procurement is one of the key
issues facing the long-term
and community sector has been able to take advantage of the increasing survival of the third sector. For
opportunities to contract - usually to deliver public services. Public Service many frontline groups the reality
Delivery is an important strand within the Sustainable Funding Income is that they must either ensure
Spectrum. Contracts are earned income - normally secured as a result of a their services are procured by
tendering process. They have legal obligations and need to be entered into some form of government body
or they will find they are out-
with proper consideration; however they can be a great way to fund your competed, unfunded and on the
work where appropriate opportunities exist. We have seen a shift from scrapheap.”
grants to contracts happening day by day and in the coming months we will Nick McAllister, Procurement
see a further move to increased open and competitive tendering, often for Champions Network, Association of
services we have traditionally delivered through grant support. As there will Chief Executives of Voluntary

be losers and winners, the sector needs to ‘get tender ready’ to survive.

Benefits and Challenges of the Contracts Funding Stream

Ensure all risks are shared between purchaser
and supplier
Can be with the public, private or voluntary
sector
Restricted income stream
Requires regular monitoring and reporting
Payment for goods or services set out in formal
terms such as a contract
Income reliant on delivery of outputs or
outcomes
Requires legal knowledge and expertise

Thinking about Contracting/Tendering? What to Consider?

Getting Tender Ready - effective tendering requires an understanding of the legislative, policy and the
practical background within which public sector procurement is taking place. It also requires a clear
understanding of what procurement officers want to see in your tender document and how to ensure that
your tender scores well at the appraisal stage. You will also need to have a grasp on procurement routes,
pre-qualification questionnaires (PQQ’s), restricted, negotiated and e-procurement procedures. Getting
Tender Ready may also be about forming consortia between organisations to tender for and deliver
contracted services. It is against this backdrop that CVS now offers regular workshops on ‘Getting Tender
Ready’ and related topics. Visit the training pages at www.yourcvs.org for more details.

CVS Tendering Advice Service - CVS provides a service for local voluntary groups that are considering or
are already tendering for local statutory sector contracts. Contact Ian Curtis, Collaborative Working Officer
on 01234 354366 or at ian@yourcvs.org for more details. Plus visit our ‘Public Service Contracting’ page
at www.yourcvs.org for up-to-date information.

ConsortiCo Ltd - in response to the Office of the Third Sector’s ‘Working in a consortium - A guide for
third sector organisations involved in public service delivery’ (December 2008), and with the move from
grants to contacts as a backdrop, a number of local charities have reacted to this change in circumstances by
creating a consortium fit for the Bedfordshire and Luton sub-region and beyond. A key reason for forming this
consortium was to provide organisations with a ‘vehicle’ that enables them to access new opportunities to
secure contracts, which would not otherwise be available to them. ConsortiCo is the resulting vehicle and
acts as a ‘Super Contractor’, identifying public service contract opportunities; and then securing these
contracts and delivering them through subcontract arrangements with local, not-for-profit, third sector
organisations, for the benefit of local communities. To learn more visit www.consortico.com or contact Ian
Curtis, CVS Collaborative Working Officer on 01234 354366 or at ian@yourcvs.org
 Funding from
Trading
Trading is an important source of funding for the voluntary and community sector. It can be used to
generate additional income for organisations. Increasingly, many charities are developing trading
activities that directly relate to their charitable objects. There are lots of benefits associated with
trading, especially when it is aligned with the social purpose of the organisation. Trading can enable
voluntary organisations to expand their customer base, and reduce their dependency on a small
number of funding sources. Income from trading is unrestricted, which means that you are free to
choose how you use any surplus. Combined with other sources of income, trading can contribute to the
long-term sustainability of your organisation. However, trading can also expose your organisation to
risks and liabilities. These risks are not just financial; there are also risks to the reputation of the
organisation if the trading activities are in conflict with its social purpose. Some groups may be
concerned about the ethical dilemmas posed by trading. Competing for trade can have an impact on
the culture of the organisation, and require board members and employees to develop new skills. So
before committing yourself to a new trading activity, it is worth spending some time helping your
organisation get ready to trade. Any voluntary group that earns most of its income through trade and
contracts could choose to call itself a social enterprise.

Benefits and Challenges of the Trading Funding Stream

Unrestricted income stream Exchange of goods or services for money
Requires product quality control Marketing and financial knowledge essential
Developing a good relationship with the con- Can be used to generate profit or contribute
sumer is vital in ensuring continued custom to costs of other work

Thinking about Trading? What to Consider?

Getting Ready to Trade: taking on new trading activities could have a major unintended impact on your
organisation unless you plan how to address some of the key issues associated with trading:
What impact will the trading activity have on the mission, purpose and values of your
organisation? Developing new trading activities can enhance the mission and purpose of your
organisation if you concentrate on generating ideas that are related to your mission, express the
values of your organisation, and fully exploit its strengths.
How will it affect the organisational culture? It is important that the development of trading
activities has the full support of your organisation.
Do you have the right organisational structure to start trading? If your organisation is a
registered charity, you need to check that it is allowed to trade in the areas you are considering.
You may need to change the structure of your organisation, or adopt a legal form better suited to
trading activities.
How will you identify the best opportunities for new trading activities? The most important
part of getting ready to trade is to make sure you select and develop the best trading activity. Start
by identifying all the opportunities open to your organisation. Sift these ideas and select the most
promising for a full feasibility study.
How to Trade - there are five key issues that need to be addressed by voluntary and community
organisations developing new trading activities, namely be competitive, know the rules, establish a
trading subsidiary, develop commercial skills, and manage risks.
Access Help - from NCVO (including Only Connect: a funded scheme to enable you to visit other voluntary
and community organisations engaged in trading and their Tools for Trading Toolkit, details available from
www.ncvo-vol.org.uk) and from Social Enterprise East (www.seee.co.uk).
 Sustainable Funding -
What else to consider
Full Cost Recovery
Voluntary organisations, like their counterparts in the public and private sectors, incur organisational
overhead costs in addition to project costs. Full Cost Recovery means accounting for an organisation’s
expenditure on the basis of incorporating all costs incurred by the organisation - Core (or Overhead)
Expenditure as well as Project Specific. Full Cost Recovery is essential for ensuring that funding
bids accurately cover all potential costs; contracts are negotiated for the full cost of delivering the
service; and pricing for products and services developed to generate trading income fully reflect the
cost to the organisation of producing or providing those goods. You can find out more about Full Cost
Recovery by visiting www.fullcostrecovery.org.uk where you can download a free version of the Full
Cost Recovery Toolkit or order a copy of the new and improved version. In addition, CVS offers regular
training sessions on this subject, so visit www.yourcvs.org to find out when we are running the next
workshop.

Loan Finance
Loan finance is a relatively new tool for the voluntary and community sector. Loans are not an income
source as such, but a financial tool or enabler. Loans may be an option where a large sum of money
is needed, to bridge gaps between receipt of grant payments, or to enable projects to move forward
during the time taken to raise capital from more traditional fundraising methods. Voluntary and
community organisations interested in loan finance, who are at the right stage in their lifecycle to
manage a loan, should initially consult commercial high street lenders, or consider the national loan
providers. Details of loan providers for voluntary groups can be found on NCVO’s website at
www.ncvo-vol.org.uk/sources-of-loan-finance

Bedfordshire and Luton Compact

The Bedfordshire and Luton Compact is a working document aimed at developing a close, efficient
and more effective equal working partnership between local voluntary and community organisations
and statutory agencies. As part of the Compact, a Funding and Procurement Code of Good
Practice has been produced and sets out the agreements that should be adhered to by both statutory
and voluntary organisations in terms of funding and procurement. This includes programme design,
the application and tender process, agreeing terms of delivery, payment terms and monitoring and
evaluation. Should your organisation have a dispute in relation to funding or procurement, the Beds
and Luton Compact provides a means of resolving that dispute. Your group needs to be a signatory
of the Compact to benefit, so visit www.bedsandlutoncompact.org.uk to learn more.

Visit the following for more guidance:

The National Council for Voluntary Organisations Sustainable Funding Project -
www.ncvo-vol.org.uk/sfp
Community and Voluntary Service - www.yourcvs.org

Guide produced by Guide funded by

Community & Voluntary Service, 43 Bromham Road, Bedford, MK40 2AA. Tel: 01234 354366. Website: www.yourcvs.org
Charity No: 1091423. Company Limited by Guarantee: 4312967